Paragon grew total mortgage lending by 23% to £721m in the six months to 31 March 2018 compared to the same period last year, half-year results showed.
This growth was underpinned by a 21% increase in its well-established buy-to-let lending which increased to £671m.
John Heron, managing director of mortgages at Paragon said: “Recent tax and regulatory changes have had a significant impact on the buy-to-let market driving a polarisation between smaller scale and more professional portfolio landlords and a retreat of some lenders from the provision of new products for portfolio landlords.
“Paragon’s many years of experience in this segment and focus on specialist underwriting means that we are well positioned to cater for the requirements of the larger scale, professional landlord with potential to outperform in this strategic segment of the market.”
The results highlighted a marked shift towards a concentration of buy-to-let activity among more professional investors. The proportion of advances made to corporate and complex landlords in the first six months reaching 72% compared with 60% last year.
In addition, Paragon saw a significant increase in customers opting for new buy-to-let mortgages with an initial fixed rate period of five years. In total, 72% of advances made in the first half were for an initial five year period, double the level recorded in the first half of 2017.
Following the launch of a new online switch and further advance service in early 2018, greater numbers of customers have opted to fix their loans for a further period following the maturity of their existing deal, contributing to higher customer retention levels.
Arrears on Paragon’s buy-to-let loan portfolio also remained very low at 0.09% compared with an average performance across the national buy-to-let market of 0.42%, according to UK Finance.
In addition to buy-to-let, Paragon’s recently developed specialist residential mortgage proposition achieved an increase in advances from £0.4m to £23m following a successful first phase expansion in distribution.
The proposition is tailored towards customers with irregular incomes, more complex employment patterns and those looking to borrow into retirement. Paragon’s second charge mortgage lending was £28m, broadly stable compared to the first half of 2017.
Paragon’s pipeline of new buy-to-let mortgage business heading into the second half was £788m, up 6% compared with last year.
Management has remained confident that the business is well placed to achieve its previously stated target for total mortgage lending, in excess of £1.6bn, for the full financial year.